Common Executor Mistakes
An executor acts as the testator’s personal representative when a deceased estate is being administered. While the role of executor can be straightforward, there are potential pitfalls for unwary executors. When executors make mistakes, it can expose the deceased estate, or even the executor personally, to litigation, tax liability or other repercussions. This article explains some of the common executor mistakes that get made when administering a deceased estate.
Common Executor Mistakes: Failing To Review The Will
Every executor should undertake some due diligence activities at the start of the executorship. This is necessary to avoid encountering more significant problems in the future. As the executor’s authority to act is derived from the deceased’s will, their first task is to confirm the validity of the will. The executor should confirm that the will they are working from is:
- the original, not a copy;
- the most recent will that the testator made;
- signed and witnessed validly;
- dated consistently; and
- not damaged, torn or otherwise altered.
If the will does have irregularities, the executor may need to apply to the Supreme Court for clarification and/or validation of the will.
Common Executor Mistakes: Failing To Identify The Assets And Liabilities Of The Estate
One of the major tasks of an executor is to collect the estate’s assets and secure them until they are transferred to the beneficiaries. The executor is unlikely to have access to a convenient inventory of the assets and may have to do some detective work. An executor may need to contact the deceased’s friends and family, lawyer, accountant and financial advisor to establish the extent of the deceased’s possessions. An executor can encounter difficulties if they fail to uncover and protect all the assets of the deceased. For instance, an executor may be held responsible for failing to find and secure a vehicle owned by the deceased, and it is subsequently damaged or stolen.
The executor is also responsible for identifying and discharging any debts and liabilities prior to finalising the deceased estate. This may involve looking through the deceased’s paperwork and bank records and identifying direct debits and other payments. The executor will also need to place an advertisement in the paper before seeking probate to allow creditors to claim against the estate. If an executor distributes an estate without first identifying all of the estate debts, they may be held personally responsible for the unpaid liabilities.
Executor Mistake: Failing To Keep Records
Even the most well-intentioned executor can forget to keep detailed records of every transaction they carry out, especially if they are also grieving the death of the testator. However, the executor must keep accurate records of every transaction they do on behalf of the deceased estate. They must be prepared to present these accounts to the beneficiaries (including final distributions) when they conclude their administration. This protects them from accusations of misconduct. The records also serve as evidence if there are questions about administration expenses or the executor’s commission.
Common Executor Mistake: Intermingling Estate Funds And Personal Funds
Another problem that can arise when an executor fails to keep accurate accounts is that they might inadvertently use estate funds for personal reasons. Using estate funds for a personal purpose amounts to fraud. An executor who commits fraud may face civil penalties and even criminal charges. For this reason, executors should always keep a separate estate or trust account and use it only for estate expenses.
Common Executor Mistake: Distributing Estate Assets Too Early
An executor is obliged to hold the assets of the deceased estate and only pass them on to the beneficiaries after the specified statutory period. However, sometimes beneficiaries put pressure on the executor to distribute estate funds and assets earlier. In some situations, it can be appropriate for an executor to make interim distributions. This should only be done if there are more than enough funds left in the estate to cover debts, possible claims and final distributions.
Common Mistake: Delaying Administration
Conversely, another common mistake is the executor inappropriately delaying the administration of the deceased estate. Typically, an executor should aim to finalise the estate administration in the 12 months after the death of the testator (known as “the executor’s year”). An executor who fails to promptly administer the estate can be removed from the role.
Common Mistake: Not Seeking Legal Advice
Executors can usually finalise small, straightforward deceased estates without assistance from a lawyer. However, it is a mistake for an executor to avoid seeking legal advice if there are complexities involved. In some instances, seeking legal advice early means saving time and money in the long run.
Being an executor can be complicated, and it can be difficult to avoid making mistakes when administering a deceased estate. Please do not hesitate to contact our specialist solicitors at Go To Court Lawyers for advice.